|October 15, 2012|
Previously published on October 10, 2012
Congress recently passed and on September 16, 2011, President Obama signed the America Invents Act. It is the most comprehensive reform of the U.S. patent system since 1952.
The Act is lengthy -- running more than 140 pages (well, that used to be lengthy) -- and complicated. Some of its provisions are immediately effective, but others are not effective until one year after enactment, and still others, six months after that. Some of its provisions will not be fully understood until years from now, after the courts have had a chance to interpret them.
Unlike other legislation coming out of Congress, this bill enjoyed strong bipartisan support, starting its journey under a Republican president and being signed into law by a Democratic president. Both parties believe the patent system can be improved to encourage innovation and economic growth. Likewise, both parties are hopeful the Act will eventually remove some of the burrs from the US patent system.
For example, patent litigation is expensive and lengthy, and is often used as a weapon. A patent of questionable validity can halt the business plans of others while they weigh the costs and impact of defending themselves in a suit for patent infringement versus the price of a license, if a license is available. The America Invents Act creates a system for challenging the validity of a patent within the U.S. patent system that is expected to be quicker and likely much cheaper than a court challenge. It also allows the Patent Office to keep filing fees and other fees it collects for use in upgrading its capabilities. By hiring and training more examiners, for example, the examination of patents is expected to become more efficient and effective.
Globalization benefits businesses by greater uniformity from country to country and through some of the changes to the America Invents Act, the US system moves closer to full harmonization with the practices in the rest of the world. For example, right now in most foreign countries, the first person to file a patent application is the one who may receive a patent. In the U.S., however, the first to invent was the one who could receive a patent -- even if someone else filed earlier. Now, under the America Invents Act, the first inventor to file is the one who may receive the patent.
Another burr the Act is designed to address is the spate of lawsuits for false patent marking. Companies who sell products covered by expired patents have been sued for failing to take the patent number off their products. Often, the plaintiffs filing suit are lawyers who have not been harmed by the out-of-date patent notice. The new Act limits standing only to those who can show actual harm.
The new Act also permits patent owners to take steps to reduce the chances their patent rights will be deemed unenforceable due to alleged inequitable conduct. When a patent infringement suit is brought, the defendant will almost invariably allege that the patent is invalid and that the plaintiff engaged in inequitable conduct to obtain the patent by failing to bring relevant prior art to the attention of the patent examiner during patent prosecution. Under the new Act, patentees have several chances to rectify that circumstance and, by doing so, minimize inequitable conduct claims against them, while simultaneously strengthening (and perhaps narrowing) their patent claims.
The America Invents Act will make significant and beneficial changes to the U.S. Patent system. These changes may be difficult and will no doubt cause stress during a transition period that could last for several years. Amendments to the Act may be needed to address its unintended consequences. Nevertheless, once the new Act is understood and phased in, it will likely make the U.S. patent system run more smoothly and effectively.